Lamar, age 43, wants to pay no more than $1,000 a year in life insurance. If the annual life insurance premium rate (per $1000 of face value) is $12.59, what is the largest whole life policy he can buy without spending more than $1,000 annually?

Question

a.
$12,590
b.
$341,540
c.
$541,370
d.
$79,000

Answer 1

Let x be the face value of the policy.
The annual premium will be (x/1000) * $12.59.
So we need to solve the inequality (x/1000) * $12.59 ≤ $1,000.
Multiplying both sides of the inequality by 1000, we get x * $12.59 ≤ $1,000,000.
Dividing both sides of the inequality by $12.59, we get x ≤ $1,000,000 / $12.59 = $79,409.67.
The largest whole life policy Lamar can buy without spending more than $1,000 annually is $79,000.
Therefore, the answer is d.